Planning Po 125
Planning Po 125
Planning Po 125
(b) Planning must start at the top, initiative and support of top
management is essential for effective planning.
1. Primary of Planning:
The functions of management include planning, organising,
staffing, directing and controlling. Eminent writers may add
other new ones to these functions or those which have not been
included in these functions. Anyway, writers unanimously
accept that planning is the primary function of all the other
functions. The reason is that the manager wants to achieve the
pre-determined objectives in a better way.
6. Planning is Flexible:
4. Planning is Economical:
If the role of employee is cleared and well defines goals, then the
employee feels highly motivated and contribute his full potential
towards accomplishment of objectives. Planning improves the
behavioural climate in the organisation and reduces the friction
between departments.
9. Effective Co-Ordination:
1. Based on Importance:
Plans can be strategic, tactical, or operational. Strategic plans
are important, future-oriented plans that form the hub of
fulfilling the vision. Usually, they concern the entire
organisation. Tactical plans are required to implement strategic
plans. Examples, are redesigning the shop floor layout or
closing a few non-performing out-lets of a retail chain.
Operational plans are related to day-to-day func-tioning such
as production, delivery, or purchase operation. Take for
instance, the plan of Precision Connectors to deliver connectors
to the two-wheeler manufacturer, which is an illustration of
operational plans.
2. Based on Time:
Plans can be short, medium, or long term. Short term usually
refers to plans of one year or less; medium term, to two to five
years; and long term, to five to 10 or even 20 years. It depends
on the nature of the project. Some projects such as building the
Metro in Mumbai or Bengaluru may have a short-term plan that
covers 50 km of Metro in five years; a medium- term plan that
covers 200 km in 10-12 years, and a long-term plan that covers
300 or 400 km of rail that in 20 to 30 years.
3. Based on Level:
A plan can be called corporate level, business level, or
functional level plan. The Tatas entering the airlines business
is an example of corporate-level plan and Precision Connectors
becoming an OEM is an example of a business-level plan.
Functional-level plans are made by departments, for example,
a plan on how the marketing department will achieve its goals.
4. Based on Formality:
A plan can be formal or informal. It is formal when planning is
done as per the defined steps and documented, and informal
when the documentation is not very rigorous.
5. Based on Approach:
A plan can be called proactive when it is meant to meet an
anticipated situation. For instance, a compensation plan based
on a three-year salary negotiation is a proactive plan to ensure
industrial peace. If the same compensation plan came up as a
result of a flash strike, it would be a reactive plan. The former
leads to growth and the latter helps to regain balance and to
ensure survival.
Feature # 8. Flexibility:
In today’s era of rapid changes in technology, market conditions
and government policies, the planning process has to be flexible
enough in order to enable managers to face and meet newer and
newer challenges. Due to rapidly changing environment, some
companies are making shorter-term plans which allow for quick
responses to customer needs and requests. The goal is to be
flexible and responsive to the market.
1. Strategic Planning:
Strategic planning includes plans made by the top management
to pursue long term goals with the resources likely to be
available.
It involves:
2. Tactical Planning:
Tactical planning specifies how the mission of an organisation
can be accomplished.
3. Operational Planning:
Operational planning works out the basic details of how the
specific tasks can be accomplished with the available resources.
Approach # 1. Top-Down:
Under this approach, only echelons of management frame
objectives, policies, strategies procedures and so on. Those at
the other levels have little to say in the planning exercise, even
though they are consulted in plan formulation. The plans made
by the top brass are implemented by managers at middle and
lower levels.
The approach assumes that only those at the top level have
requisite skill, knowledge and authority to plan. Thus plans
made reflect the values and visions of the top management. This
approach is practised in family-run organizations and
centralized organizational structure.
Approach # 2. Bottom-Up:
This is virtual reversal of top-down approach. Under this
approach, plan proposals originate from supervisory
management level and travels upwards. The top management
limits itself only to issuing guidelines for planning. The lower
level management evolves planning taking into account the
ground reality.
The implicit belief under this approach is that those who are
concerned with implementation of plans are more informed,
more practical and the plans formulated by them reflect
realism. Top management unifies all sub-corporate plans. This
approach is called participative approach.
Approach # 3. Composite:
This is the blend of top-down and bottom- up approach. This
approach gives broad guidelines and parameters to the line
executives at middle and lower level management. It gives
support, resources and freedom to evolve plans to middle and
lower level managements. But the plans evolved are thoroughly
reviewed and adjusted in consultation with other levels of
management. This is semi- participative approach. This
approach is suited to many organizations.
Approach # 4. Team:
This approach envisages granting autonomy to teams in the
matter of planning and execution thereof. It fixes accountability
on those empowered with resources and authority in respect of
the results expected of them. The team comprising functional
specialists is led by a team leader. He, in turn, empowers the
members to evolve plans suitable to their area and fixes
accountability for the results.
The process which are applicable to the most types of plans are
discussed below:
The manager may take the help of these techniques to reach the
most objective result. The best possible alternative may be
chosen by the manager after detailed analysis. Sometimes,
evaluation of available alternatives may disclose that two or
more courses are advisable and so the concerned manager may
decide to choose two or more alternatives and combine them to
suit the requirements of the situation.
1. Goal Orientation:
2. Specificity:
3. Accuracy:
Plans are like maps, and we all know that an inaccurate map
can lead us to the wrong place. For example, if Rajendra makes
a plan to produce 1,000 connectors a day, it must be based on
the number of connectors a person/team can make per day and
the number of peo-ple/teams available.
4. Comprehensiveness:
5. Flexibility:
6. Objectivity:
7. Simplicity:
8. Communicability:
9. Implementable:
This implies that there should not be any external
envi-ronmental restrictions to implement the plan. Coca Cola
had a bottling plant in Plachimada in Kerala, India. Most
bottling plants need copious water, and ground water is a
practical source. Plachimada had plenty of water and there is
no national law against using it.
1. Lack of Flexibility:
Plans lay down a specified course of action regarding the future,
which cannot be changed even if situations so demand. This
often proves to be costly for the organisation, particularly when
there is need for a change in the actual course of action. And
this is why some progressive firms now rely on contingency
planning. The object is to overcome crisis situations as and
when they arise.
3. Environmental Uncertainty:
At times planning loses its practical relevance due to various
uncertainties surrounding the environment. So managers
cannot fully rely on existing plans. They have to revise or modify
existing plans or change their strategies to get the desired
results even in adverse situations. For instance, a company
might be required to revise its advertisement budget to maintain
competitive parity, i.e., to match the efforts of its major and
nearest rivals.
4. Time Lag:
Planning which involves several steps such as – defining
objectives, collecting and analysing data and choosing from
alternatives is a time-consuming and lengthy exercise. It loses
effectiveness due to delay in taking necessary action. In other
words, planning loses its relevance in situations which demand
quick decision(s) and immediate action(s).
5. Costly Process:
Planning is also a costly exercise. Since management is a
valuable resource, the cost of planning varies directly and
proportionately with the time managers devote to planning. If
managers do not devote sufficient time to planning, their
decisions may prove to be impractical or wrong.
7. Inaccurate Forecast:
Planning is based on the timely availability of reliable and
complete information and accuracy of forecasts of demand,
price and technology. If forecasts are based on incomplete
information or if the forecasting method is not reliable, then
plans are bound to be ineffective or likely to fail.
8. Time Constraint:
Planning requires a manager to set aside necessary time to do
it. Managers who have very busy schedules may react adversely
when superiors order them to prepare a 5-year plan for their
work unit. The reason is that they are expected to do this and
still find time to meet the current year’s target. However, the
time for planning has to be found. Otherwise, managers will just
react to events.
8. Setting Responsibility:
If responsibility is fixed for framing and implementing the plans,
plans will be more realistic. Strategic plans should be the
responsibility of top management, tactical plans should be the
responsibility of middle-level managers and operating plans
should be the responsibility of lower-level managers.